> A large part of the justification of using outsourced workers is that they live in an area with a lower cost of living than the company's headquarters, so they can be paid less while still having a good quality of life.

It has nothing to do with CoL and everything to do with a company paying what they think is competitive with the other options you have.

I live somewhere with a higher CoL than the states. American companies open branches here, and pay much lower, local salaries.

Thinking it has anything to do with CoL is pure "Just World" fallacy.